What factors decide where to open a company in Europe
When choosing where to open a company in Europe there are three levers that weigh more than any other: taxation (how much you will pay on profits and sales), the cost and timeline of incorporation, and the operational ease of the country (language, banking and accounting obligations).
There is no better country in the abstract: there is the country that best fits your profile. A service SME may prioritise taxation, an ecommerce business logistics and VAT, and a holding company dividend exemption. That is why we compare the six destinations we work with at Filnet.
Key points
- Taxation: corporate tax and VAT
- Incorporation cost and timeline
- Operational ease: language, banking and accounting obligations
Taxation compared: corporate tax and VAT
Corporate tax is what most influences your net profit. Portugal applies an IRC of 21%, France an IS of 25% and Germany an IS that, adding the solidarity surcharge and the municipal tax, stands between 30% and 33%. Italy applies an IRES of 24%, to which the IRAP on production is also added. At the other end, Andorra (IS of 10%) and Dubai (Corporate Tax of 9%) offer the lowest rates in the comparison.
In indirect tax the range is also wide: Portuguese VAT is 23%, French 20%, German 19% and Italian 22%, while Andorran IGI stays at 4.5% and Dubai VAT at 5%. If you sell to the end consumer, this rate conditions your sale price as much as corporate tax.
Key points
- Portugal: IRC 19%, VAT 23%
- Andorra: IS 10%, IGI 4.5%
- Dubai: Corporate Tax 9%, VAT 5%
- France: IS 25%, VAT 20%
- Germany: IS 30-33%, VAT 19%
- Italy: IRES 24%, VAT 22%
Cost and timeline of incorporation by country
The initial outlay and the time to become operational also decide where to open a company in Europe. These are the incorporation costs, the monthly maintenance fee and the formalities, with the estimated incorporation time in each destination:
Key points
- Portugal (LDA-Unipessoal): 4-8 weeks. IRC 19%, VAT 23%.
- Andorra (SL/SLU): 2-6 weeks. Corporate tax 10%, IGI 4.5%.
- Dubai (Free Zone or Mainland): 1-3 weeks. Corporate Tax 9%, VAT 5%.
- France (SAS/SASU): 3-6 weeks. Corporate tax 25%, VAT 20%.
- Germany (GmbH): 6-14 weeks. Corporate tax 30-33%, VAT 19%, capital €25,000.
- Italy (SRL/SRLS): 4-10 weeks. IRES 24%, VAT 22%.
Which country fits your SME profile
For an ecommerce business selling across the EU, Portugal or France are usually the most balanced entry point: inside the Union, with intra-community VAT in operation and moderate taxation. Germany is attractive when the German market is your target, although it requires more capital (€25,000 for the GmbH) and timelines of 6 to 14 weeks.
If your priority is to reduce corporate tax, Andorra (corporate tax 10%) and Dubai (9%) are the most efficient destinations, with the particularity that Dubai is outside the EU and Andorra requires foreign investment authorisation or a residence link. For a holding company, Portugal, France, Germany and Italy offer dividend exemption regimes that should be studied before deciding.
Key points
- Ecommerce and online sales: Portugal or France for intra-community VAT and EU logistics
- Services and consulting: Portugal for lower incorporation costs
- Tax optimisation: Andorra (corporate tax 10%) or Dubai (CT 9%)
- Holding company: Portugal, France, Germany or Italy for dividend exemption
- German market: Germany (GmbH) if you are going to sell there
How to start: decide where to open a company in Europe with data
The best way to choose where to open a company in Europe is to put your numbers on the table: expected turnover, margin, target market and desired structure. With that data, the above comparison gives you a first shortlist, but the tax detail of each country —double taxation treaties, intra-community VAT or Social Security— can tip the balance.
At Filnet we help you decide with real advice, not templates: we compare countries with their rates and timelines and review your case before you move anything. You can start with the country comparison or the cost calculator. If you have questions about your specific case, write to us at hola@filnet.app.
